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Some People Are Hanging On By A Thread

A report from DS News. “‘I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank,’ said Boise Redfin Real Estate Agent Shauna Pendleton. ‘That killed the buyer momentum that had been building and brought us right back to where we were last year when mortgage rates shot up. There’s this fear that everything will crash.’ Pandemic boomtowns and pricey Bay Area markets led the price declines in March. In Boise, ID, prices fell 15.4% from a year earlier, more than any other U.S. metro area Redfin analyzed. Next came Austin, TX (-13.7%), Sacramento, CA (-11.9%), San Jose, CA (-10.5%), and Oakland, CA (-9.7%). Boise also saw the largest drop in pending home sales, with a 78.8% year-over-year decline. Nationwide, pending sales fell 26.6% on a seasonally-adjusted basis to the lowest level since the onset of the pandemic (April 2020).”

City Weekly in Utah. “The median list price for a home in Salt Lake City has dropped to $525,000, down from more than $650,000 during the pandemic rush. Provo’s average now is $435,000 and St. George is $537,000. But Ogden is one of the most affordable, larger cities in Utah, with a median home sales price last month of $368,000, down 7.7% over last year; and Logan is down 5.1% over last year with an average list price of $370,000.”

The News Tribune in Washington. “Another high-profile development in Tacoma has run into financial trouble. Construction of Tacoma Trax, 415 E. 25th St. next to the Tacoma Dome Station, is facing multiple lien filings, according to Pierce County Assessor-Treasurer records online. A notice of trustee sale recorded in Pierce County on March 31 announces a July 21 foreclosure auction for Tacoma Trax and the developers’ completed Madison Plaza project in Kent, which is also part of the court filings. The complaint states that Madison-Trax stopped work on the Tacoma property in December. Eugene Gershman, CEO of GIS International Group told The News Tribune regarding the potential foreclosure for both Trax and Madison Plaza, ‘I think our lender’s being a little aggressive. Cost of construction has gone up,’ he added. ‘And a lot of projects are not penciling.'”

Bisnow Dallas Fort Worth in Texas. “A $38.7M loan on a Class-A office property in Richardson has been transferred to a special servicer following the downsizing of the building’s largest tenant. The property’s CMBS loan isn’t scheduled to expire until 2025, but the threat of an imminent default could explain why the debt has been transferred to a special servicer, said Amber Sefert, managing director of credit and asset management at Trimont Real Estate Advisors. Sefert isn’t affiliated with the loan.”

“‘The borrower may have advised the lender that they do not have sufficient funds to make the loan payments after United Healthcare stops paying rent when their lease expires in June,’ Sefert said. ‘Alternatively, the borrower could have asked for a reduced monthly loan payment based on the fact that their income will dramatically drop in June when United Healthcare leaves,’ she added. ‘Either way, this will put the loan in payment default.'”

The New York Post on California. “Rihanna has splashed out a cool $21 million for a nearly 9,300-square-foot Los Angeles penthouse formerly owned by ‘Friends’ mainstay Matthew Perry,  who purchased the unit back in 2017 for $20 million. Perry later sold the residence in a record-breaking sale that was Southern California’s priciest condo in 2021 for $21.6 million. He hoped to score $35 million. Nick Molnar bought it from the actor. But it looks like Molnar is willing to take a slight loss. Initially listing the home in October for $28 million, Rihanna was able to negotiate it down $8 million, possibly using LA’s new mansion tax implemented on April 1 as a bargaining tool.”

The Pacific Coast Business Times in California. “Since 2016, an estimated 40,000 more residents have left Ventura County than new people moving in, the report says. Jon Coupal, president of the Howard Jarvis Taxpayers Association, addressed the exodus of people and businesses from California because of high tax rates and the high cost of living and doing business. ‘You’ve seen the list of businesses, a list about 15 pages long, major corporations moving out of the state of California to other states, really gutting our tax base,’ Coupal said.”

“He said the Public Policy Institute of California had an April 13 blog post that stated, ‘Our findings suggest that taxes might be a factor in where higher-income people go when they leave the state.’ ‘And my reaction was, ‘Thank you Capt. Obvious,’ Coupal said to laughs.”

The Globe and Mail in Canada. “Sales in the area dropped 38.4 per cent in March from the same month last year, according to the Waterloo Region Association of Realtors (WRAR). The average price for all residential properties in March was $779,017, which marks an 18.6-per-cent decrease from March, 2022, according to WRAR. Alexis Victor, real estate agent with Royal LePage Signature Realty, points to one property that was listed with an asking price of $1.9-million last year, then taken off the market when it failed to sell. More recently it was relisted with an asking price of $1.5-million. ‘People have realistic expectations and they are putting their properties on the market because they want to sell them, whereas before they just wanted to see what they could get.'”

“Some homeowners became panicked when the Bank of Canada moved last year to aggressively lift its key interest rate, she says, but lenders have been working with some people to help them stay in their properties, she says. She adds that some homeowners may be forced to sell if the Bank of Canada raises rates in the coming months. ‘Some people are hanging on by a thread.'”

“Faisal Susiwala, broker at Re/Max Twin City, sees a possible shift in the market later this year. ‘Inventory is at a low level. I expect that to change drastically coming into the fall. We feel it at ground level.’ So far, homeowners are holding on in the face of higher rates by ‘robbing Peter to pay Paul,’ he says. Buyers who purchased in the spring and early summer of 2018 and took out a five-year fixed-rate mortgage will see those agreements coming up for renewal in August and September, he says. He sees potential for trouble for some of those folks who took out a home equity line of credit (HELOC) in 2020 and 2021 when interest rates were as low as 1.5 per cent. Many people decided to take advantage of the low borrowing costs to put in a backyard pool or build an addition, he says. Now the variable rate on a HELOC is around 7.2 per cent, he points out.”

The Irish Times. “Walking through the suburbs of Luxembourg, the evidence of a decade-long real estate boom is frozen in time. Once-rural villages have developed into satellite suburbs, the streetscape nearly unrecognisable as farmhouses gave way to geometric, glass-fronted new-build developments in gleaming white and grey. You can easily get lost. Streets exist that did not before. The pace of the development has been such that Google Maps has not kept up with the change and still shows fields where rows of new-build apartment buildings now stand.”

“Despite a growing population and high demand for affordable homes, however, many of these apartments are empty. The development was accompanied by one of the steepest rises in house prices in Europe over the last decade. Prices more than doubled between 2010 and the third quarter of 2022 in Luxembourg, rising by a striking 140 per cent. Among European Union countries, only Estonia and Hungary saw steeper rises. In Ireland, house prices rose 50 per cent in the same period, putting us firmly mid-table.”

“There are signs now that this decade-long trend is coming to an abrupt halt across the Continent. ‘The bubble is bursting,’ one long-time Luxembourg real estate investor told me. ‘The new builds are not selling at all. Zero.’ The length of the cheap money era made some people forget how closely tied house prices were to interest rates.”

“At its peak, prices for new property in prime Luxembourg locations tipped €18,000 per square metre. Many developers built, expecting a payout like that and paid for land accordingly. Now, they are holding off on dropping their prices because they don’t want to make a loss. ‘Fourteen thousand, eighteen thousand a square metre was normal,’ one investor recalls. ‘Now, you’re lucky to get ten thousand. The new builds, they cannot sell because at ten thousand a square metre they might just break even.'”

“It all makes for the anachronistic situation in which brand new homes stand empty, advertisements posted in their windows and the debris of recent building work stretching around them. Across Europe, it is clear that the long housing rally has peaked. In the second half of 2022, Germany saw the biggest six-month fall in house prices in more than 20 years.”

“In Copenhagen, the number of houses sold in September halved compared to the same month the previous year. It was the lowest number of monthly sales since 2012. In November, the Netherlands saw its biggest quarterly drop in house prices since 2013. All in all, two thirds of the economies tracked by the OECD saw house prices decline in their most recent quarter. Denmark saw a drop of 5.9 per cent compared to the previous quarter. In Sweden, the drop was 4.6 per cent. From Latvia to Germany, Italy to the Netherlands, house prices declined.”

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This Post Has 84 Comments

  1. ‘There’s this fear that everything will crash’

    It’s already crashed Shauna. Now we witness the ‘soft landing’.

    1. “‘I was consistently busy in the fall, but things got really quiet in March after the collapse of Silicon Valley Bank,’ said Boise Redfin Real Estate Agent Shauna Pendleton.

      “busy” i.e. hosting open houses that no one attended, meeting with potential sellers who want to list their homes for 100k more than anyone would even consider paying, and keeping up with the 500 new listings each week that won’t sell.

  2. ‘The length of the cheap money era made some people forget how closely tied house prices were to interest rates’

    We used to say about Greenspan, it’s one thing to cut rates. It’s another to keep them there for years.

  3. ‘The property’s CMBS loan isn’t scheduled to expire until 2025, but the threat of an imminent default could explain why the debt has been transferred to a special servicer’

    They saw the handwriting on the wall and bailed. Good money after bad.

    1. This is a great example of the process that occurs and ultimately causes all of the big money real estate pools to become impaired. They wind up having to take a break for a few years and that is when prices begin to plummet and empty shacks start piling up. Little by little demand evaporates and suddenly large financial entities lock their doors to ‘spend more time with their families’. Is it wrong to enjoy watching them fail?

      BTW what happened to the daily twitter links? Those were fun to read. It’s like gawking at a slow motion car wreck, you know you shouldn’t but you can’t help it.

  4. ‘So far, homeowners are holding on in the face of higher rates by ‘robbing Peter to pay Paul,’ he says. Buyers who purchased in the spring and early summer of 2018 and took out a five-year fixed-rate mortgage will see those agreements coming up for renewal in August and September, he says. He sees potential for trouble for some of those folks who took out a home equity line of credit (HELOC) in 2020 and 2021 when interest rates were as low as 1.5 per cent. Many people decided to take advantage of the low borrowing costs to put in a backyard pool or build an addition, he says. Now the variable rate on a HELOC is around 7.2 per cent, he points out’

    Of course people are hanging by a thread. How could they not be?

    One interesting thing about the Santo videos the past two days: sales dropped week over week in every part of greater Toronto, in every single category of igloo. That shouldn’t be happening in the spring. But it’s a sellers market!

    1. “to put in a backyard pool or build an addition,”

      Or a home office in the basement. Home-schooling pod classrooms too. When I worked at home, I remember hearing lots of construction going on in the background of meetings.

    2. Five years can sound like a long time, but it isn’t. Aussies, Brits, Kiwis and Canucks might call those loans fixed rate, but they really are adjustable.

  5. “‘There’s this fear that everything will crash.’ Pandemic boomtowns and pricey Bay Area markets led the price declines in March. In Boise, ID, prices fell 15.4% from a year earlier, more than any other U.S. metro area Redfin analyzed. Next came Austin, TX (-13.7%), Sacramento, CA (-11.9%), San Jose, CA (-10.5%), and Oakland, CA (-9.7%). Boise also saw the largest drop in pending home sales, with a 78.8% year-over-year decline. Nationwide, pending sales fell 26.6% on a seasonally-adjusted basis to the lowest level since the onset of the pandemic (April 2020).”

    – The bigger the boom, the bigger the bust. Those markets that shot up the most are now cratering the most.
    – I thought prices always go up? 😂
    – Everyone likes the bubble on the way up. Now that the market peak has passed and prices are falling, it’s the end of the world. ☠️
    – BTW, housing is just one part of The Everything Bubble. Stonks are now resuming their bear market down trend. 🐻
    – Free $ from the Fed has consequences.
    – Enjoyed the boom? Now enjoy the bust. The bust was inevitable once the bubble was started. This is Government (and Fed as their agent) policy. They love us. ❤️
    – In my view, we’ll be lucky to have a recession. Based on the sheer magnitude of this bubble (MOAB), a depression is more likely.
    – Have a nice day.

  7. Biden rule will redistribute high-risk loan costs to homeowners with good credit

    By Michael Lee | Fox News
    Published April 19, 2023 5:11pm EDT

    A Biden administration rule is set to take effect that will force good-credit home buyers to pay more for their mortgages to subsidize loans to higher-risk borrowers.

    Experts believe that borrowers with a credit score of about 680 would pay around $40 more per month on a $400,000 mortgage under rules from the Federal Housing Finance Agency that go into effect May 1, costs that will help subsidize people with lower credit ratings also looking for a mortgage, according to a Washington Times report Tuesday.

    “The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” Ian Wright, a senior loan officer at Bay Equity Home Loans, told the Times. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”

    https://www.foxnews.com/us/biden-rule-redistribute-high-risk-loan-costs-homeowners-good-credit

    1. It’s too bad that the $40 isn’t charged separately, with a separate payment, labeled as “pay for some deadbeat’s affordable housing.” If people had to pay that every month and knew why, they might think about who they’re voting for.

      1. Ditto for those cellular plan taxes. This free schitt gravy train is how the Ds keep getting reelected.

    1. The Financial Times
      San Francisco
      Hollowing out of San Francisco raises fears over status as top tech hub
      Soaring office vacancies amplify concerns over violent crime and homelessness
      Pictures of San Francisco
      Vacancy rates have risen as job cuts in the tech industry and fears of crime have hit downtown San Francisco
      George Hammond and Tabby Kinder in San Francisco 5 hours ago

      At rush hour on a recent morning in downtown San Francisco, passengers exiting the Civic Centre station had to step over a discarded hypodermic needle, an all too common sight in a city where open air drug use has become unremarkable.

      Around the station, usage of which has plunged two-thirds since 2019, the most obvious presence was not commuters heading into work but rather groups of homeless people and workers from a social enterprise trying to help them.

      Homelessness and addiction are nothing new in San Francisco, which has fought a long campaign to house the vulnerable, but a surge of office vacancies following the pandemic has left the city feeling increasingly hollowed out.
      …

  11. Does it bring tears to your eyes when you think about how much money corporate real estate investing behemoths are losing as this bust gains force?

    1. Finance ·Housing
      The Western housing market recession hit so hard and fast that a Fortune 500 firm that was riding high at $34 per share has crashed to $1
      BY Lance Lambert
      April 20, 2023 at 2:35 AM PDT
      Photo of the Surprise Valley neighborhood in Boise
      Boise home prices are down 9.3% from their 2022 peak, according to Zillow.
      Getty Images

      Nestled in the sprawling desert community of North Las Vegas, the three-bedroom home at 6043 Clovelly St. perfectly embodies what has gone terribly wrong at Opendoor Technologies. Back in April 2022, Opendoor bought the home for $420,900. The company then flipped it back onto the market in May 2022 for $480,000, only it was too late: Las Vegas had already shifted from a housing boom into a sharp housing correction. By the time the home sold in January 2023, Opendoor fetched only $346,000—or 17.8% less than the purchase price.

      “They [Opendoor] are taking huge losses, and as buying agents, we are all testing their pain threshold. When I represent a buyer, it’s my fiduciary duty to represent them the best I can,” Chris Davis, a real estate agent in Phoenix, tells Fortune. “So when I look at an Opendoor house for a client, as a buyer’s agent, we are coming in low and hard. We are getting counter offers and we are having conversations. If they weren’t desperate, we wouldn’t be having conversations or getting counter offers, but they want these things off their books.”

      We’ve seen this movie before. Back in 2008, leveraged amateur home flippers across the country had no choice but to sell—or foreclose—at big losses as home prices began to slide. Only this time around, the correction is regional, and it’s a corporate titan that got stuck holding the bag.
      …
      https://fortune.com/2023/04/20/western-housing-market-recession-so-hard-fortune-500-firm-stock-crashed-opendoor/

      1. “Las Vegas had already shifted from a housing boom into a sharp housing correction. By the time the home sold in January 2023, Opendoor fetched only $346,000—or 17.8% less than the purchase price.”

        The longer you delay a sale when prices are CR8Ring, the more money you lose.

      2. “…a Fortune 500 firm that was riding high at $34 per share has crashed to $1”

        1-1/34 = 97% drop in stock price

        Is that alot?

    2. Technology
      San Francisco-based real estate darling Opendoor lays off 22% of its workforce
      Stephen Council, SFGATE
      April 20, 2023
      An Opendoor “For Sale” sign is posted outside a home.
      Matt Wier/Courtesy of Opendoor

      Opendoor, an online real estate firm, is laying off 560 employees, or 22% of the company — the second major job cut at the San Francisco-based company in less than six months.

      Announced Tuesday and confirmed in a note to SFGATE, the layoff round will mainly hit workers in Opendoor’s operations unit. A spokesperson said laid-off workers will receive severance pay, extended health benefits and job transition support.

      “We’re taking these actions now to better align our operational costs with the anticipated near-term market opportunity,” the spokesperson’s statement said. The spokesperson did not respond to questions about severance specifics or office space changes.
      …
      https://www.sfgate.com/tech/article/opendoor-real-estate-tech-layoffs-17908963.php

      1. Opendoor business plan:

        1) Leverage up
        2) Buy houses
        3) Wait awhile
        4) Sell houses
        5) PROFIT $$$

      2. San Francisco-based real estate darling Opendoor lays off 22% of its workforce

        That’s all? 22%? Or is this just the first round?

    3. Blackstone is the latest victim of the weakening commercial real estate market
      By Nicole Goodkind, CNN
      Updated 8:36 PM EDT, Thu April 20, 2023

      New York CNN —

      The ongoing commercial real estate slowdown has a new victim: Blackstone, the largest owner of commercial real estate globally. The company saw its distributable earnings — the profit distributed to shareholders after expenses — plunge 36% since last year. That’s raising eyebrows on Wall Street as investors assess the fallout from last month’s regional banking crisis.

      Blackrock’s decline was driven by an easing of value in its real estate investments. The company’s real estate segment’s distributable earnings fell 58% since last year. Profits from sales fell 54% to $4.4 billion, down from $9.5 billion last year, for the amount of total commercial real estate assets sold. But that number is a reflection of fewer assets sold, not necessarily of lower prices, a spokesperson for Blackstone told CNN.

      After decades of thriving growth bolstered by low interest rates and easy credit, the $20 trillion commercial real estate industry has seemingly hit a wall. Office and retail property valuations have been falling since the pandemic brought about lower occupancy rates and changes in where people work and how they shop. The Federal Reserve’s efforts to fight inflation by raising interest rates have also hurt the credit-dependent industry.

      Recent banking stress has added to those woes. Lending to commercial real estate developers and managers largely comes from small and midsize banks, where the pressure on liquidity has been most severe. About 80% of all bank loans for commercial properties come from regional banks, according to Goldman Sachs economists.

      Recently, short-sellers have stepped up their bets against commercial landlords, indicating that they think the market will continue to fall as regional banks limit access to credit. Real estate is the most shorted industry globally and the third most in the United States, according to S&P Global.
      …
      https://www.cnn.com/2023/04/20/investing/blackstone-earnings-cre/index.html

  12. A high school buddy of mine is a relitter in Boise. I doubt he follows this blog like I do. Last summer or late spring I told him Boise would fall. He scoffed, saying everyone wants to move there from California. Boise is different!

    LOL

    1. I can imagine the look of horror on his face when mortgage interest rates began their steady climb and offers shriveled up.

    3. “A high school buddy of mine is a relitter in Boise.”

      What the heck are you doing here?

      My friends are ice fishing in the shack over there.

      Those guys are your friends?

      You know ’em? – They’re here every Sunday.

      We call them the Drunken Dry-heavin’ Cheese-eatin’ Outhouse Boys.

      They’re your friends?

      They’re acquaintances, really. – Right.

      https://youtu.be/BYzux5Lmmak?t=13

      1. “Florida is still way too friggin’ high.”

        Saw your comment and took a quick spin around 33458 on Liar.com and it turns out you are correct, in my hood anyway.

        1. My husband and I are seriously discussing a move to Alabama. It’s probably a good idea, but I’m having a hard time with the idea of leaving my home town. Ah, well. It’s not like I’m the first person in the history of the world who may have to do this. :/

          2. “My husband and I are seriously discussing a move to Alabama.”

            I know it’s frustrating waiting and renting at an also inflated price.

            I don’t think you were checking on this blog back in late 2005 when I sold the 2/2 I bought in 1984 which getting married and having kids made necessary.

            Anyway I started looking to buy probably somewhere in 2001 whith the prices rising and kept waiting thinking the insane rising house prices would stop and come back to normal.

            Well that didn’t work so by 2005 I decided to sell into the insane market, which I did, rent for a couple of years by which time the market would surely crash and then buy. Well it crashed by 2008 or 09 or whatever it was but enter the bailouts and robo-signed victims living in their houses without making a payment and a floor was put under inventory and prices. Fast forward to 2012 and I bought a house with most of what I wanted at a price that still should have been much lower but looking back was reasonable and in an area I wanted to live.

            Point being I know how frustrating what you and your husband are going through.

            Next time I will tell you about the two different landlords I rented from who were in foreclosure on both houses and put $1,700.00 a month in their pocket without paying the mortgage on the houses I rented from them between 2006 – 2012.

          3. Jeff,
            I turned 14 in 2005, so the only things I cared about where playing with my rabbit and using all the sidewalk chalk.
            But I have heard of people pocketing money while not making payments. I cannot believe those landlords weren’t thrown in jail. It’s absolutely disgusting.
            I, for one, am glad you found a home that made you happy! 🙂

          4. Three of my four kids were adults in 2005. The last was a year away and soon ran off an got married. I was divorced after 32 years. She got crazy and ran off never to return. I got out of the Victorian mansion I had bought her to “make her happy”. Within a few years I had paid off all the marital debts (I let her go without any liability for them). I started to look for a piece of land here in my native state. Came close to a couple of deals with what little cash there was, but didn’t hook up. I lived on my boat. Ten years ago I made an offer on a house in town that nobody else could buy because it wasn’t financeable. I wrote a check. Here I am. I have a 1000 ft2 studio on the first floor and my “apartment” upstairs.

            Life is unpredictable. Enjoy every minute of it.

          5. Life is unpredictable. Enjoy every minute of it

            +1

            Life happens when you’re busy making plans.

          6. “I, for one, am glad you found a home that made you happy!”

            You stay happy with your husband and family and your home will find you.

  13. Nationwide, pending sales fell 26.6% on a seasonally-adjusted basis to the lowest level since the onset of the pandemic (April 2020).”

    Is that a lot?

  14. “Sales in the area dropped 38.4 per cent in March from the same month last year, according to the Waterloo Region Association of Realtors (WRAR).

    For recent graduates of our most excellent public school system who may not have paid attention when the topic was exhaustively covered in your history class, here’s ABBA to tell us about Waterloo:

    https://www.youtube.com/watch?v=YFk6-Mn-8yg

  15. Just in from Crain’s New York:

    SL Green says decline in office occupancy is accelerating

    Demand for workspace continues to erode even as crowds return to city’s hotels, theaters and restaurants

    1. Yahoo Finance
      Stocks edge lower, Tesla plummets over 9%: Stock market news today
      Josh Schafer
      April 20, 2023 at 1:05 PM·3 min read
      In this article:

      U.S. stocks closed lower on Thursday amid weaker-than-expected quarterly profit at Tesla (TSLA), mixed earnings data from various sectors, and softer-than-expected housing and jobs data.

      The S&P 500 (^GSPC) fell 0.59% recovering from earlier lows, while the Dow Jones Industrial Average (^DJI) dropped nearly 108 points, or 0.32%. The technology-heavy Nasdaq Composite (^IXIC) fell 0.80%.

      Tesla stock was down 9.75%, hitting its lowest level in nearly three months, after the company reported first-quarter earnings on Wednesday that fell short of Wall Street’s expectations. Tesla’s recent price cuts weighed on profits as the electric vehicle maker reported quarterly gross margins of 19.3%, while Wall Street analysts had expected 20.7%.
      …
      https://finance.yahoo.com/news/stock-market-news-today-live-updates-april-20-115343246.html

        2. When they said the the stage separation was next, and the camera inside the rocket, next to the nozzles showed nothing happening, it was obvious that was the end of that flight.

          TBH, if anything exploded, I was expecting the booster to go kaboom on the launch pad. When it cleared the pad and then Max-Q i thought that maybe it would succeed.

        3. Did you see all that environmental destruction and air pollution? But they’re going to take away our ICE cars and force us into space boy’s EVs while he plays rocket man and pollutes on a massive scale.

          1. Did you see all that environmental destruction and air pollution?

            No, I didn’t. How much was it?

            Don’t they use renewables to fly that thing?

    2. The Financial Times
      Markets Briefing Equities
      US stocks retreat and bonds rise as investors sour on economic outlook
      Tesla shares sink after electric-car maker signals move to sacrifice margins
      A montage of a globe and a chart
      The weakness in US stocks followed declines in most of Europe and a mixed day in Asia
      George Steer in London and Nicholas Megaw in New York 6 hours ago

      US and European stocks slipped on Thursday after a number of disappointing first-quarter earnings reports, but government debt rallied as bond investors focused on new unemployment figures.

      Wall Street’s benchmark S&P 500 fell 0.6 per cent while the tech-heavy Nasdaq Composite slid 0.8 per cent.

      Electric-car maker Tesla dropped almost 10 per cent after the group reported that price cuts had driven its profit margin even lower than already reduced forecasts.
      …

    3. The Financial Times
      Tesla Inc
      Elon Musk signals willingness to sacrifice Tesla margins for market share
      Electric-car maker’s chief says it will ‘invest in growth as fast as possible’ after slashing prices to boost demand
      A sign marks the location of a Tesla dealership
      The number of vehicles Tesla delivered in the quarter rose only 4% from the final quarter of 2022
      Richard Waters in San Francisco yesterday

      Elon Musk has indicated he is willing to sacrifice Tesla’s profits in the short term in an aggressive push for market share, with the aim of making more money later when the company’s cars are fully autonomous and can earn extra fees by operating as “robotaxis”.

      The Tesla chief executive’s unconventional justification for why shareholders should stomach lower profits came as the US electric-car maker reported that price cuts this year had driven its profits margins in the first quarter below already-reduced forecasts.

      Musk’s comments on an earnings call on Wednesday pushed Tesla shares lower in after-market trading, adding another 6 per cent to the 10 per cent decline they had suffered since the start of the month on worries about falling demand.
      …

    4. Bloomberg
      Wealth
      Elon Musk’s Wealth Plunges $13 Billion as Drama Unfolds Across Empire
      In the span of 24 hours, Tesla’s earnings disappointed, a SpaceX rocket exploded and Twitter purged legacy blue checkmarks.
      SpaceX Says Starship Launch Was a Success
      By Tom Maloney
      April 20, 2023 at 2:18 PM PDT

      It has been a tumultuous 24 hours for Elon Musk.

      Tesla Inc. disappointed investors with its first-quarter results, sending the electric-car maker’s shares down 9.75% on Thursday to $162.99. An experimental Starship rocket designed by SpaceX achieved liftoff in Boca Chica, Texas, only to explode about four minutes later in a fiery ball above the Gulf of Mexico. And on Twitter, as Musk promised weeks ago, many users lost their legacy blue checkmarks for choosing not to pay $8 per month for the privilege.

      When it comes to the billionaire’s net worth, Tesla’s sinking share price had the most immediate consequences. His wealth dropped by $12.6 billion as a result, according to the Bloomberg Billionaires Index, his biggest decline this year. His stake in Tesla, including shares and options, makes up the biggest part of his $163.9 billion fortune, though SpaceX has become more important as its valuation soars.
      …
      https://www.bloomberg.com/news/articles/2023-04-20/elon-musk-net-worth-tumbles-on-day-tesla-earnings-miss-spacex-rocket-explodes#xj4y7vzkg?leadSource=uverify%20wall

  17. We did some work yesterday disconnecting power feeds to cubicles in a large commercial space in Westminster, CO, after a mass layoff at a shall remain unnamed tech company that has been in business 20+ years.

    All the cubicles will get removed and (maybe?) re-used by somebody, but about 200 monitors are all going to e-waste recycling. Tons of office supplies left behind, chairs, various personal items left behind, all going to the landfill.

    This 4 story building was pretty empty all day. The cafeteria on the first floor is closed, indefinitely. Maybe a total of less than 20 vehicles in the parking lot all day, including us and the cubicle demolition crew.

    1. An ebayer could sell every one of those monitors. I bet you could get 5 bucks apiece easy (quick 1k) to drop them off.

    2. 200 monitors

      Ancient CRT’s, or LED/LCD?

      CRT’s you have to pay to get rid of them, but unless the flay panels are ancient they are not worthless.

      There are businesses that will buy old office furniture and equipment. They pay pennies on the dollar, but that’s still better than paying to have it hauled away.

    1. DOW 30 -0.33%
      S&P 500 -0.60%
      NASDAQ 100 -0.78%

      Markets are facing a black swan event with ‘nowhere to hide’ as the latest rally has fueled a bubble that could burst at any time, veteran technical analyst says
      Jennifer Sor
      Apr 20, 2023, 10:50 AM PDT
      Black swans swim at a zoo in Wuhan, Hubei province, China.
      Reuters/China Photos

      – Markets are facing a black swan event, according to veteran strategist Jeff Bierman.

      – Bierman pointed to a positive correlation between 5 assets, which is a sign the market is overbought.

      – “This is a witch’s brew for the pain trade to the downside,” Bierman said in a note on Thursday.
      …
      https://markets.businessinsider.com/news/stocks/stock-market-outlook-black-swan-crash-rally-bubble-burst-earnings-2023-4

    2. The Financial Times
      Opinion Lex
      US regional banks: gloomy weather ahead means umbrellas remain at hand
      As the pace of monetary policy tightening slows, the fight for deposits will intensify
      The Zions Bank main office in Salt Lake City, Utah
      Expect even higher funding costs from banks such as Zions Bank
      8 hours ago

      For US regional banks, surviving the turmoil that followed in the wake of Silicon Valley Bank’s collapse may be the easy bit. The hard part is charting a path to sustained profit growth in the midst of rising funding costs, cracks in the commercial real estate market and possible tougher regulatory oversight.

      First-quarter earnings released by a range of US regional banks have been better than feared. Most reported lower deposit levels as customers rushed to “too big to fail” institutions and money market funds. But the pace of the outflow — which ranged from 1 to 11 per cent — was well below that which felled SVB and Signature Bank last month.

      Among the 12 banks that have reported earnings, the bulk delivered year-on-year growth in quarterly net income. Western Alliance was the notable outlier, with a 40 per cent drop.

      Net interest margins have probably peaked. Banks will face tougher comparatives in the coming quarters as the pace of tightening slows.

      The fight for deposits will also intensify. Deposit beta, or the share of Federal Reserve rate rises that banks pass along to depositors, will rise. Expect even higher funding costs from banks such as Zions, which tap more expensive short-term borrowings from the Federal Home Loan Banks system.
      …

    3. Markets
      CNBC TV
      Watchlist
      Economy
      Veteran investor David Roche says a credit crunch is coming for ‘small-town America’
      Published Thu, Apr 20 20239:17 AM EDT
      Elliot Smith

      Key Points
      – The collapse of Silicon Valley Bank and two other small U.S. lenders last month triggered contagion fears that led to record outflows of deposits from smaller banks.
      – Earnings reports last week indicated that billions of dollars of deposit outflows from small and mid-sized regional lenders, executed amid the panic, were redirected to Wall Street giants.

      The banking turmoil of March, which saw the collapse of several regional U.S. lenders, will lead to a credit crunch for “small-town America,” according to veteran strategist David Roche.

      The collapse of Silicon Valley Bank and two other small U.S. lenders last month triggered contagion fears that led to record outflows of deposits from smaller banks.

      Earnings reports last week indicated that billions of dollars of deposit outflows from small and mid-sized lenders, executed amid the panic, were redirected to Wall Street giants — with JPMorgan Chase, Wells Fargo and Citigroup reporting massive inflows.

      “I think we’ve learned that the big banks are seen as a safe haven, and the deposits which flow out of the small and regional banks flow into them (big banks), but we’ve got to remember in a lot of key sectors, the smaller banks account for over 50% of lending,” Roche, president of Independent Strategy, told CNBC’s “Squawk Box Europe” on Thursday.

      “So I think, on balance, the net result is going to be a further tightening of credit policy, of readiness to lend, and a contraction of credit to the economy, particularly to the real economy — things like services, hospitality, construction and indeed small and medium-sized enterprises — and we’ve got to remember that those sectors, the kind of small America, small-town America, account for 35 or 40% of output.”
      …
      https://www.cnbc.com/2023/04/20/veteran-investor-david-roche-says-a-credit-crunch-is-coming-for-small-town-america.html

  19. Now that inflation is under control, the Fed is set to pivot any day now, and interest rates are falling, is mortgage demand picking up to undergird a housing market rebound in the second half of 2023?

    1. Fox Business
      Home Mortgage
      Published April 19, 2023 12:31pm EDT
      Mortgage demand plummets as interest rates soar higher
      By Megan Henney FOXBusiness

      A key measure of home-purchase applications fell sharply last week as consumer demand cooled in the face of higher mortgage rates.

      The Mortgage Bankers Association’s index of mortgage applications tumbled 8.8% last week for the first time in months, according to new data published on Wednesday.

      “Last week’s increase in mortgage rates prompted a pullback in application activity,” said Joel Kan, MBA’s deputy chief economist. “With more first-time homebuyers in the market, we continue to see increased sensitivity to rate changes.”

      Demand for refinancing also continued to plunge last week, tumbling another 6%, according to the survey. Compared with the same time last year, refinance applications are down a stunning 56%.

      “Rates remained more than a full percentage point above the same week a year ago,” Kan said. “This leaves very little refinance incentive for most homeowners.”

      The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign.

      Policymakers already lifted the benchmark federal funds rate nine consecutive times and have signaled that a 10th increase is on the table at their May meeting amid signs of underlying inflationary pressures within the economy.
      …
      https://www.foxbusiness.com/economy/mortgage-demand-plummets-interest-rates-soar-higher

    2. Economist who called 2008 housing crash predicts another 15% drop in home prices
      Home prices have a way to go before they hit bottom, economist argues
      By Megan Henney FOXBusiness

      A U.S. economist famous for predicting the 2008 housing crash believes that home prices could plunge another 15% this year.

      In a recent analyst note, Ian Shepherdson – the founder and chief economist of Pantheon Macroeconomics – suggested that home price declines will accelerate further in 2023 as a result of low affordability and growing inventory.

      “We estimate that single-family home prices have fallen by 5.4% from their recent peak in May 2022, but they still need to fall by a further 15% or so before they return to their long-run average, compared to disposable incomes,” he wrote in a recent note to clients.

      Although consumer demand likely is bouncing back from a low point in the fall as mortgage rates fall from a record-high, Shepherdson – who predicted the mid-2000s housing bubble and subsequent recession – believes that prices have a ways to go before they hit bottom.
      …
      https://www.foxbusiness.com/economy/economist-who-called-2008-housing-crash-predicts-another-drop-home-prices

    3. Home prices have biggest decline since 2012 amid slow market
      by AUSTIN DENEAN | The National Desk
      Thu, April 20th 2023, 10:09 AM PDT
      A sign announces newly built homes at a development in Sudbury, Ma., on Sunday, March 12, 2023.
      (AP Photo/Peter Morgan)
      A sign announces a home for sale on Munjoy Hill, Wednesday, Jan. 25, 2023, in Portland, Maine.
      (AP Photo/Robert F. Bukaty)
      A real estate sign is posted outside of a recently sold home, Tuesday, Feb. 21, 2023, in Valrico, Fla. On Tuesday, (AP Photo/Phelan M. Ebenhack)

      WASHINGTON (TND) — Home prices posted their biggest annual decline since 2012 in March as higher mortgage rates and tighter lending conditions continue to hold down the market.

      A Redfin report released Wednesday said the median home sale price fell 3.3% in March to $400,528. That dip follows a 1.2% decline in February, which was the first time average values had dropped since 2012.

      Areas with some of the biggest price booms during the pandemic are being hit the hardest with the price reductions. Prices in Boise, Idaho had a 15.4% decline from last year, along with a 13.7% dip in Austin, Texas, and nearly 10% and above in California’s Bay Area which includes Sacramento, Oakland and San Jose.

      Redfin said expensive coastal markets and pandemic boomtowns are having the fastest market adjustments because home prices overheated during the last few years and are “coming back down to earth” after those jumps priced more people out.

      “This year’s spring homebuying season is lackluster,” said Redfin chief economist Daryl Fairweather. “There are some signs of the typical seasonal uptick—homes are selling faster than they were in the winter—but that’s partly because there are so few new listings. Normally we see homebuyers come out in throngs at this time of year, which isn’t happening.”
      …
      https://komonews.com/news/nation-world/spring-homebuying-season-off-to-a-slow-start-bringing-down-home-prices-redfin-fannie-mae-freddie-mac-mortgage-rates-interest-existing-home-sales

    4. Economy
      Published April 20, 2023 10:29am EDT
      Existing home sales unexpectedly fall in March, reversing recent gains
      Existing home sales fall 2.2% as mortgage rates post sharp increase
      By Megan Henney FOXBusiness

      Sales of previously owned homes tumbled 2.4% in March from the prior month to an annual rate of 4.4 million units, according to new data released Thursday by the National Association of Realtors (NAR). On an annual basis, existing home sales are down 22% when compared with March 2022.

      “Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Lawrence Yun, NAR chief economist. “Yet, at the same time, multiple offers on starter homes are quite common, implying more supply is needed to fully satisfy demand. It’s a unique housing market.”

      The interest rate-sensitive housing market has cooled rapidly in the wake of the Federal Reserve’s aggressive tightening campaign.
      …
      https://www.foxbusiness.com/economy/existing-home-sales-unexpectedly-fall-march-reversing-recent-gains

    5. Apr. 19, 2023
      The Spring Housing Market Is a Miserable Game of Chicken
      By Kim Velsey, who is Curbed’s real-estate reporter.
      Photo: Jeenah Moon/Bloomberg via Getty Images

      After nearly a year of high interest rates, high housing prices, and meager listings inventory, buyers and real-estate brokers have been looking forward to the spring, when a flurry of new listings typically come on the market. So far, however, the pickings have remained depressingly slim. “I’ve been telling my buyers that it’s spring and there’s going to be good inventory coming on,” says Lauren Cangiano, an associate broker at Brown Harris Stevens. “But it didn’t. It just didn’t.”

      It’s not that there’s nothing on the market, clarifies Kimberly Jay, an associate broker at Compass, “it’s that there’s very little that’s good.” Most listings are either overpriced or have been sitting for months, brokers say. Usually both. A handful of sellers are willing to take offers — Jay recently represented two different clients who bought at 530 Park Avenue, a condo conversion on the Upper East Side. The deals happened, she says, because the owners were open to negotiation — going down to $1.63 million, for example, on a unit asking $1.84 million. But most sellers are standing firm, convinced that they’ll eventually find a buyer willing to pay last year’s high prices. “I have a seller who made an offer on something and the broker said, ‘Oh, we’ve had higher offers than that and we turned them down. We’re not even going to consider it.’ There’s no sense of urgency,” says Jay.
      …
      https://www.curbed.com/2023/04/the-spring-housing-market-is-a-miserable-game-of-chicken.html

    6. A brutal reckoning for real estate agents
      Many won’t survive the housing crunch
      A House speeding downwards with graph arrows towards a realtor
      Tyler Le/Insider
      James Rodriguez
      Apr 19, 2023, 3:04 AM PDT

      When Chrystina Arnold closed her first sale as a real-estate agent in December, she hoped it would provide a springboard to more deals and the start of a promising career. But almost four months later, Arnold is still trying to close a second sale.

      Arnold, who lives in Port Huron, Michigan, paid $89 in October 2021 for a self-paced online course to become a real-estate agent. But by the time she got her license, in June, the typical mortgage rate had nearly doubled, leading to a dramatic slowdown in buying activity.

      That drop-off has made the past year a struggle, Arnold told me. The first service she enlisted to help her find clients scammed her out of $600, and that December deal didn’t provide the financial windfall she needed. Even though Arnold represented both the buyer and the seller, the $57,000 sale netted her only a $2,300 commission — hardly enough to cover the various fees she pays to her brokerage, the National Association of Realtors, the company that sends her leads, and the multiple-listing service, a database where she can see homes for sale in her area. She’s occasionally worked at a bar or delivered pizzas to supplement her fiancé’s income and support her 6-year-old son. Despite the setbacks, she’s not giving up hope yet.
      …
      https://www.businessinsider.com/real-estate-agents-realtors-reckoning-housing-market-home-sales-slow-2023-4

      1. “Arnold, who lives in Port Huron, Michigan, paid $89 in October 2021 for a self-paced online course to become a real-estate agent. ”

        Whoa…Chrystina has skin in the game!

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